Expert Proves That Increased Supply Is Not Cause of XRP Price Underperformance

XRP investors remain in a state of unease. Their frustration simmers as the token underperforms compared to other digital assets.

Many point the finger at Ripple’s massive XRP holdings, the monthly releases from escrow, and subsequent XRP sales, as the sole culprit. However, prominent analysts are urging caution, presenting evidence that paints a more complex picture.

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CryptoInsightUK, a respected market analyst, has emerged as a vocal advocate for a more nuanced understanding. Utilizing compelling data, he dismantles the simplistic inflation narrative, revealing inconsistencies that demand further exploration.

Zooming In on Key Figures

In 2018, XRP boasted a $130.4 billion market cap with a circulating supply of 38.7 billion, holding a commanding 18% share of the total crypto market cap.

Fast forward to 2021, while the supply witnessed a 21% increase within four years, the broader market experienced a monumental bull run, skyrocketing to a staggering $3.032 trillion – a phenomenal 325% surge. This growth far outpaced XRP’s supply expansion, indicating that market cap expansion significantly outweighed the increase in circulating supply.

Examining Ethereum (ETH), we see a 22% supply increase during the same period, yet its price defied expectations, soaring by an impressive 382%. Similar trends were observed across other cryptocurrencies, suggesting that attributing XRP’s price stagnation solely to an increase in circulating supply is a dangerous oversimplification.

Shifting the Lens: Looking Beyond the Obvious

CryptoInsightUK emphasizes that focusing solely on XRP’s supply increase ignores a crucial fact: the additional $2.3 trillion injected into the crypto market during this period dwarfs the token’s supply increase. This suggests that forces beyond inflation are at play, influencing XRP’s price movements in complex ways.

CrediBULL, another market observer, lends support to this perspective by drawing parallels between HBAR and XRP. In 2022, HBAR’s price remained stagnant around $0.20-$0.25 despite a comparable supply increase. However, the broader market crash dragged it down.

Interestingly, since December 2022, HBAR’s price has surged by a remarkable 204% despite continued supply growth. This suggests that smart money might be accumulating even during supply increases, potentially anticipating future price uptrends.

Read Also: Ripple Files Opposition To the SEC’s Move for Interlocutory Appeal Approval

Also, Attorney Bill Morgan adds a critical layer to the discussion, He stated that XRP exhibits similar patterns to HBAR. He emphasizes that solely attributing XRP’s underperformance to supply inflation paints an incomplete picture, neglecting other crucial factors that must be considered for a comprehensive understanding.

 

Embracing a Holistic View

While the data presented by these analysts compels us to reconsider the inflation narrative, it’s crucial to remember that this is just one piece of the puzzle.

To truly understand XRP’s price performance, we must acknowledge the multifaceted nature of the market. Broader market sentiment, regulatory developments, and unforeseen events can significantly impact individual token prices.

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